Between 1996 and 1999, China's energy output dropped by 17 percent, while primary energy use declined by 12percent, mainly due to falling coal use. Since China is the world's second-largest emitter of greenhouse gases, it is important to understand the sources of this apparent transformation, including intentional and unintentional policy impacts, and whether it portends a permanent change in patterns of energy use. This remarkable reversal of the long-term expansion of energy use has occurred even as the economy has continued to grow, albeit more slowly than in the early 1990s. Policies instituted under the umbrella of economic system reform, along with energy-supply, energy-efficiency, and environmental-protection policies, have apparently led to at least a temporary decline in, and perhaps a long-term reduction in the growth of energy use, and therefore greenhouse gas emissions. Although this recent drop appears to be mainly unintentional, the rate of growth in energy use in the coming decades will depend crucially on what steps China takes over the next few years to formulate policy and build institutions in the areas of energy supply and energy efficiency.